Military and Space Markets
Just as it has in almost every industry, the globalization trend has taken hold in the military sector of aerospace with the Joint Strike Fighter (JSF), a U.S.-led multinational government venture to build a multi-functional stealth fighter jet, known as the F-35 Lightning II. Lockheed Martin is the prime contractor with industrial partners Northrop Grumman and BAE Systems, plus a host of suppliers in the United States, United Kingdom, Canada, Australia, Italy, the Netherlands, Denmark, Norway, and Turkey. The aircraft, under development since the late 1990s, made its inaugural flight in December. According to Lockheed Martin, the United States and United Kingdom alone are planning to acquire more than 2,500 F-35s; the other countries in the program are expected to add about 700 more to the total, and sales to other international customers could push the final number of aircraft to 4,500 or beyond.
One new development in the military sector is a growing demand for Unmanned Aerial Vehicles (UAVs). A Teal Group market study predicts the UAV market to triple over the next 10 years, from $2.7 to $8.3 billion annually, and continue to rise to as high as $55 billion in the following decade.
In both the military and space sectors of aerospace, it has become increasingly common for competitors to work together. NASA's primary industry partner, United Space Alliance (USA), is a partnership of Boeing and Lockheed Martin. Headquartered in Houston and employing more than 10,000 workers in Texas, Florida, and Alabama, USA relies on more than 1,200 suppliers in 45 states and reported 2006 revenues of $1.9 billion.
Public interest in space has increased since 2004, when President Bush announced his Vision for Space Exploration (VSE), calling for a return of humans to the moon no later than 2020. Plans also include fulfillment of U.S. commitments to complete the International Space Station (ISS) and to retire the space shuttle by 2010.
To replace the shuttle, NASA has selected the Orion spacecraft, for which Lockheed Martin has been named prime contractor, and the Aries I reusable launch vehicle, for which a contract will be announced this summer. NASA also awarded Commercial Orbital Transportation Services contracts to two entrepreneurial companies - Oklahoma City-based Rocketplane Kistler and El Segundo, California-based Space Exploration Technologies Corporation (SpaceX) - to develop reusable space vehicles and systems to deliver people and cargo to the ISS. The two companies will receive a combined total of $500 million; this is the first time that NASA has granted commercial contracts based on high-level goals and objectives rather than detailed specifications.
Meanwhile, states, counties, and local economic development agencies throughout the country are investing in spaceports. Most recently, voters in New Mexico narrowly approved funding for Spaceport America, located near the White Sands Missile Range, where Virgin Galactic plans a space tourism operation. Commercial launch facilities already exist in California, Oklahoma, Alaska, Virginia, and Florida, most assisted in large part by state or local funding; others are in the works or proposed in Washington, Texas, and Ohio.
Commercialization of space, continued globalization, consolidation of power at the top levels of the industry, cooperation among competitors, increased outsourcing and subcontracting with larger numbers of suppliers, ongoing technological advances, and worldwide market growth will continue to shape the future of aerospace. Military developments and U.S. politics will also play a major role.
AIA has compiled a list of "Top Issues" for 2007. These include: • ensuring adequate NASA funding for both the VSE program and basic aeronautics research;
• modernization of the U.S. export control system and promoting free and fair trade;
• improving Department of Defense acquisition policies and procedures;
• strengthening the U.S. National Security Space (NSS) program;
• advancing worldwide ethical business practices in the industry;
• implementing the next-generation air traffic control system to eliminate the gridlock that has plagued the airline industry lately; and
• increasing awareness of the U.S. aerospace industry as a strategic national security and economic asset.
A shortfall of aerospace talent may become a serious issue in a few years as current skilled professionals retire in ever-increasing numbers. "We've got to find young people to come into this industry," says Douglass, adding that he spends a lot of time trying to nurture young engineers and scientists. A popular AIA event is its annual rocket contest for students.
Asked what advice he would give to economic development agencies or areas seeking to attract aerospace, Douglass says that they should focus on the worker issue: "We are not particularly drawn to areas by the availability of natural resources. We go where the people are. So if a community is interested in attracting aerospace work into their area, the single most important thing that they can do is show that they have a viable, trainable work force who can work in the aerospace industry.